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Exercises Financial Accounting - EPS & Investment

Fabiola Kristi
Fabiola Kristi

This document contains two problems related to earnings per share (EPS) and bond investments. Problem 1 provides financial data for ABC Company and asks to calculate basic and diluted EPS. Problem 2 provides details of bonds purchased by AAA and asks to prepare journal entries to record the purchase, amortization schedule, interest received, and sale of the bonds.

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SOAL ASISTENSI AKUNTANSI KEUANGAN 2 EARNING PER SHARE & INVESTMENT (1) Dosen: Ibu Dini Marina | Asdos: Fabiola Kristi | Pertemuan 4 | Page 1 UNIVERSITAS INDONESIA FAKULTAS EKONOMI DEPARTEMEN AKUNTANSI PROBLEM 1 The following data pertains to ABC Company for 2013: Net Income for the year $2,400,000 8% Convertible bonds issued at par ($2,000/bond) 4,000,000 Each bond is convertible into 60 ordinary shares. The liability component of the bonds is $3,600,000 based on a market rate of 9%. 6% Convertible, cumulative preference shares, $400 par value. 8,000,000 Each share is convertible into 2 ordinary shares. Ordinary shares, $20 par value 12,000,000 Tax rate for 2013 40% Average market price of ordinary share $50 per share There were no changes during 2013 in the number of ordinary shares, preference shares, or convertible bonds outstanding. There are no treasury shares. The company also has ordinary share options (granted in a prior year) to purchase 150,000 ordinary shares at $40 per share. Instructions: 1. Determine the number of shares used to compute basic EPS per share for the year ended December 31, 2013. 2. Compute basic earnings per share for 2013. 3. Compute diluted earnings per share for 2013. PROBLEM 2 Debt Investment On January 1 20x2, AAA purchased 15% bonds, having a maturity value of Rp 10,000,000 for Rp 11,895,393. The bonds provide the bondholders with 10% yield. The bond will mature January 1 20x7 with interest receivable December 31 each year. AAAs business model is to hold these bonds to collect contractual cash flows. 1. Prepare the journal entry at the date of the bond purchase 2. Prepare a bond amortization schedule 3. Prepare the journal entry to record the interest received and the amortization for 20x2 and 20x3 4. AAA sold the bonds for Rp 11,100,000 at January 1, 20x5 after receiving interest revenue.

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Exercises Financial Accounting - EPS & Investment

  • 1. SOAL ASISTENSI AKUNTANSI KEUANGAN 2 EARNING PER SHARE & INVESTMENT (1) Dosen: Ibu Dini Marina | Asdos: Fabiola Kristi | Pertemuan 4 | Page 1 UNIVERSITAS INDONESIA FAKULTAS EKONOMI DEPARTEMEN AKUNTANSI PROBLEM 1 The following data pertains to ABC Company for 2013: Net Income for the year $2,400,000 8% Convertible bonds issued at par ($2,000/bond) 4,000,000 Each bond is convertible into 60 ordinary shares. The liability component of the bonds is $3,600,000 based on a market rate of 9%. 6% Convertible, cumulative preference shares, $400 par value. 8,000,000 Each share is convertible into 2 ordinary shares. Ordinary shares, $20 par value 12,000,000 Tax rate for 2013 40% Average market price of ordinary share $50 per share There were no changes during 2013 in the number of ordinary shares, preference shares, or convertible bonds outstanding. There are no treasury shares. The company also has ordinary share options (granted in a prior year) to purchase 150,000 ordinary shares at $40 per share. Instructions: 1. Determine the number of shares used to compute basic EPS per share for the year ended December 31, 2013. 2. Compute basic earnings per share for 2013. 3. Compute diluted earnings per share for 2013. PROBLEM 2 Debt Investment On January 1 20x2, AAA purchased 15% bonds, having a maturity value of Rp 10,000,000 for Rp 11,895,393. The bonds provide the bondholders with 10% yield. The bond will mature January 1 20x7 with interest receivable December 31 each year. AAAs business model is to hold these bonds to collect contractual cash flows. 1. Prepare the journal entry at the date of the bond purchase 2. Prepare a bond amortization schedule 3. Prepare the journal entry to record the interest received and the amortization for 20x2 and 20x3 4. AAA sold the bonds for Rp 11,100,000 at January 1, 20x5 after receiving interest revenue.